How does uninsured and underinsured motorist coverage work?
Uninsured motorist coverage, as the name implies, compensates the insured individual for the losses if those are caused by a driver having no auto insurance protection. Thereby, it comes to be of service, even when the insured suffers injuries due to a hit-and-run driver.
In some cases, the other party's auto insurance limits might be inadequate. As a result, the injured party might need to pay the costs for the damages or medical injuries out of his own pocket. The underinsured motorist coverage compensates the insured in such cases.
Uninsured motorist (UM) and underinsured motorist (UIM) coverage tries to reduce the financial impact after you get involved in an accident, and suffer injuries or when your vehicle gets damaged. Such insurance policies even pay for the lost wages if your injuries force you to stay at home, and thus can be extremely beneficial.
What if you don't have UM or UIM coverage?
In case you don't carry UM or UIM coverage, your health insurance will supposedly cover the medical costs for injuries. Consequently, that will raise your health insurance rates. If you have UM or UIM coverage, your health insurer won't need to lend financial assistance for the accidental injuries, since the auto insurer will compensate for the medical bills only.
However, heath insurance coverage doesn't compensate for the lost income during such injuries, which UM or UIM coverage pays for. Again, you won't be able to claim for pain and suffering from your health insurer if you don't have UM/UIM coverage.
You can demand for the lost wages and pain and suffering from the at-fault party after the accident. If he doesn't have liability coverage or his policy limits are inadequate, you'll be left with no option than to take up your demand to the court. Legal procedures are time-consuming and expensive. Besides, an uninsured driver might not have the financial strength to pay for your losses.
How is the fault determined?
Your UM or UIM insurance policy will only compensate for the losses if the other party is found to be at-fault during the accident. Even if you live in a no-fault state, it is sensible to buy insurance coverage for protection against the uninsured motorists. Since your right to sue the other driver is restricted in the no-fault states, having UM or UIM protection would mean that you'll be paid for injuries and pain and suffering by your own insurer only.
Nevertheless, certain states determine the fault of both the parties involved through the laws of comparative-negligence. So even if you carry UM or UIM coverage along with the standard auto insurance, you'll only be paid for the damages after your liability for the accident is determined.
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